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rejecting the plaintiff's contention that an insurance company's delay of payments was a continuing violation that tolled the CPA statute of limitations
Summary of this case from Dees v. Allstate Ins. Co.Opinion
No. 58618-1-I.
July 14, 2008.
Appeal from a judgment of the Superior Court for King County, No. 97-2-30391-5, Mary E. Roberts, J., entered July 28, 2006.
Affirmed by unpublished opinion per Becker, J., concurred in by Ellington and Lau, JJ.
Appellants had a jury trial on their claim that Allstate engaged in bad faith conduct and violated the Consumer Protection Act. The jury brought in a verdict for Allstate. The Greenes contend the trial court erred in refusing to direct a verdict in their favor, and they make numerous additional assignments of error. We find no error and affirm.
In 1994, Cheryl Greene and her son Saul were the victims of a violent crime involving Cheryl's car. While Cheryl was picking Saul up from daycare, a stranger accosted her, pushed her into her car, and threatened to shoot her unless she moved over and gave him the keys. He drove her to an ATM and forced her to obtain cash, which he used to buy drugs. Despite his continued threats, Cheryl — who was pregnant with her second child — watched for an opportunity to escape. When they passed a police car, Cheryl opened the car door and jumped out, holding Saul. The kidnapper sped off in Cheryl's car and ran over both of her legs, severely fracturing her ankles. Cheryl's husband Mitchell soon arrived at the scene where he observed fire trucks, ambulances, and police cars and saw his wife lying on a stretcher with both of her legs in splints. Saul was screaming uncontrollably.
The Greenes had car insurance with Allstate. The insurance policy included personal injury protection coverage (PIP) for medical and other expenses incurred when a covered person is injured "while in, on, getting into or out of a motor vehicle" or is "struck as a pedestrian by the insured motor vehicle." It also included underinsured motorist (UIM) coverage.
Exhibit 2 at 15 (Allstate Automobile Policy for Cheryl and Mitchell Greene).
The Greenes initiated a PIP claim to cover Cheryl and Saul's medical expenses and for Mitchell's counseling costs. Allstate approved Cheryl and Saul's PIP applications. Allstate denied Mitchell's request for PIP coverage on the basis that he was not in, getting into or out of, a motor vehicle when his loss occurred. The Greenes did not request UIM benefits, and Allstate did not inform them that their UIM coverage was pertinent to the claim.
In December 1997, two years after the carjacking, the Greenes sued the carjacker, who did not appear. A default order was entered. In August 2000, two years later, the Greenes filed a motion for entry of default judgment. At this time, they notified Allstate about the default order and their intention to take a default judgment at a hearing set for September 14, 2000. Their letter referred to a claim for UIM coverage. Upon receiving the letter, Allstate opened a file for the Greenes' UIM claims and assigned adjuster Ed Sumabat to handle it.
Allstate intervened in the default action against the carjacker, filing an answer and a cross-claim. The default action against the carjacker was eventually resolved by entry of judgment of $925,337.01 for Cheryl, $415,520.63 for Saul, and $182,715.00 for Mitchell. Mitchell's award included compensation for his loss of consortium.
Allstate offered to tender the "each person" policy limits of $100,000 UIM to settle Cheryl's UIM claim. The Greenes responded with a letter demanding payment of the overall $300,000 UIM policy limits for Cheryl, Mitchell, and Saul. After some negotiations, Allstate agreed to pay $100,000 each to Cheryl and Saul. Cheryl's check was sent in January 2001, and Saul's in April 2001. Allstate did not agree that Mitchell had an independent UIM claim, however, and went to court seeking a declaration that his cognizable damages were encompassed within the "each person" limit applicable to Cheryl's UIM claim.
Exhibit 50 (October 9, 2000 Letter from Allstate to counsel for Greenes).
Exhibit 51 (October 16, 2000 Letter from counsel for Greenes to Allstate).
In July 2001, the trial court agreed with Allstate that Mitchell did not have an independent UIM claim for emotional distress damages because he did not suffer bodily injury and also because his damages did not arise from the "use" of a motor vehicle. Because Mitchell's loss of consortium damages were derivative of Cheryl's claim, they were subject to her limit of $100,000. The Greenes appealed this decision, and in September 2002 this court issued an opinion reversing. Greene v. Young, 113 Wn. App. 746, 54 P.3d 734 (2002). We concluded that Mitchell experienced "bodily injury" because he arrived at the scene so soon afterwards and his emotional distress was accompanied by physical manifestations. We further concluded that his injury arose out of the "use" of the vehicle. Even though the vehicle did not actually touch him, there was a sufficient causal connection between the vehicle and his injury. The case was remanded to the trial court to segregate Mitchell's loss of consortium damages from the damages in his independent claim. In December 2003, seven months after the mandate issued in Greene, Allstate paid Mitchell's UIM claim in full, plus attorney fees.
Meanwhile, in May 2001, the Greenes answered Allstate's counterclaims and asserted cross claims for breach of contract, violation of the Consumer Protection Act, bad faith, and declaratory relief. The Greenes alleged that Allstate had wrongfully failed to inform them about UIM coverage, wrongfully delayed payment on Cheryl and Saul's PIP and UIM claims, and wrongfully denied Mitchell's PIP and UIM claims.
The trial court dismissed all these claims on summary judgment or after the close of evidence, with the exception of the bad faith and Consumer Protection claims that Cheryl and Saul were pursuing with respect to Allstate's handling of their UIM claims. On these remaining claims, the jury brought in a defense verdict after a trial lasting seven days.
The Greenes appeal from the jury verdict and from the court's decisions to dismiss their other claims.
BAD FAITH AND CONSUMER PROTECTION ACT
The Greenes alleged that Allstate committed bad faith by not immediately informing the Greenes that the UIM coverage was applicable to Cheryl and Saul, and by dealing with them unfairly after a claim file for UIM coverage was finally opened six years after the carjacking. They attempted to establish Allstate's bad faith as a matter of law through a motion for partial summary judgment and later by a motion for a directed verdict. The trial court denied both motions. The Greenes assign error to these rulings, contending that the verdict should be set aside because the trial court should have found the facts compelled a verdict in their favor.
An order denying a motion for summary judgment is not appealable if there is a subsequent trial on the merits. Johnson v. Rothstein, 52 Wn. App. 303, 306, 759 P.2d 471 (1988). Because there has been a trial on the merits, the only question properly before this court is whether the trial court erred in denying the Greenes' motion for a directed verdict.
The inquiry on appeal is limited to whether the evidence presented was sufficient to sustain the jury's verdict. A directed verdict is appropriate if, when viewing the material evidence most favorable to the nonmoving party, the court can say, as a matter of law, that there is no substantial evidence or reasonable inferences to sustain a verdict for the nonmoving party. The requirement of substantial evidence necessitates that the evidence be such that it would convince "an unprejudiced, thinking mind." Industrial Indem. Co. of the Northwest, Inc. v. Kallevig, 114 Wn.2d 907, 916, 792 P.2d 520 (1990).
The duty of good faith owed by an insurer to its insured is statutory. Anderson v. State Farm Mutual Ins. Co., 101 Wn. App. 323, 329, 2 P.3d 1029 (2000); RCW 48.01.030. The tort of bad faith is defined as a breach of the obligation to deal fairly with an insured, giving equal consideration to the insured's interests. Anderson, 101 Wn. App. at 329. As long as the insurance company acts with honesty, bases its decision on adequate information, and does not overemphasize its own interests, an insured is not entitled to base a bad faith or consumer protection claim against its insurer on the basis of a good faith mistake. Coventry Assoc. v. American States Ins. Co., 136 Wn.2d 269, 280, 961 P.2d 933 (1998). To establish bad faith, an insured must show that the breach was unreasonable, frivolous, or unfounded. Kirk v. Mt. Airy Ins. Co., 134 Wn.2d 558, 560, 951 P.2d 1124 (1998). If the insurer's denial of coverage is based on a reasonable interpretation of the insurance policy, there is no action for bad faith. Kirk, 134 Wn.2d at 560. The determinative question is reasonableness of the insurer's actions in light of all the facts and circumstances of the case. Anderson, 101 Wn. App. at 329-30.
WAC 284-30-350
The carjacking accident occurred in 1994, and Allstate began to pay PIP benefits soon afterwards for Cheryl and Saul. But there was no discussion of UIM coverage at that time. Allstate did not assign a claims adjuster to the UIM aspect of the case until the fall of 2000, in response to a letter from the Greenes. The Greenes contend that Allstate acted in bad faith as a matter of law by failing to tell them after the accident that they had uninsured motorist coverage that was applicable to Cheryl and Saul's injuries. Their claim is based on an insurance regulation that creates an affirmative duty to disclose "pertinent" policy benefits when a claim is presented:
No insurer shall fail to fully disclose to first party claimants all pertinent benefits, coverages or other provisions of an insurance policy or insurance contract under which a claim is presented.
WAC 284-30-350(1); Anderson, 101 Wn. App. at 330.
The Greenes rely on Anderson, a case in which we held the insurer violated the WAC regulation as a matter of law. The insured was involved in a serious car accident. She and her passenger reported that another vehicle caused the accident. Her insurer sent her a letter explaining benefits available under the policy. It did not mention UIM coverage. When the insured learned about the possibility of UIM coverage eight months later and submitted a claim, it was denied based on the insurer's interviews with other witnesses who said the insured caused the accident. The insured sued for bad faith and violation of the Consumer Protection Act based on the insurer's initial failure to disclose the UIM coverage in the policy. The suit was dismissed on summary judgment but this court reversed, holding that the insurer committed bad faith and engaged in unfair claims settlement practice as a matter of law when it ignored its insured's plausible account of the accident and accepted as truthful only those descriptions of the accident that would negate coverage.
Like the plaintiff in Anderson, the Greenes belatedly obtained UIM coverage only by asking for it some time after the accident; Allstate did not initially advise them that the coverage was available. They contend that like the insurer in Anderson, Allstate committed bad faith as a matter of law by failing to disclose pertinent coverage. They point to an adjuster's April 1995 entry in a claim diary: "I agree that SS would not apply." (SS refers to uninsured motorist coverage.) They contend this entry, and some other evidence, shows that Allstate internally discussed the UIM coverage and identified it as "pertinent," but unilaterally decided in bad faith not to inform them about it.
Exhibit 100 (Allstate Claim Diary — April 19, 1995).
To prove the bad faith claim, the Greenes had to show that Allstate's failure to disclose the UIM coverage was unreasonable in light of all the facts and circumstances of the case. Anderson, 101 Wn. App. at 329-30. The jury heard that the entire incident was caused by a criminal who intentionally commandeered and drove the Greenes' vehicle. The jury heard testimony that this was not a typical fact pattern for UIM coverage and that the terms of the policy appeared to rule out coverage. Under the policy, Allstate agreed to pay "damages for bodily injury or property damage which an insured is legally entitled to recover from the owner or operator of an underinsured motor vehicle." But the claimed injury "must be caused by accident" and must "arise out of the ownership, maintenance, or use of an underinsured motor vehicle." The policy states that an "underinsured motor vehicle is not . . . an insured motor vehicle under this policy." Cheryl's car was an insured motor vehicle under the policy. Given the language of the policy, and the fact the injuries arose out of the intentionally criminal use of a vehicle insured under the policy, a jury could rationally conclude that it was not unreasonable for Allstate to decide that the UIM cove rage did not apply.
Exhibit 2 at 18 (Allstate Automobile Policy for Cheryl and Mitchell Greene) (emphasis added).
In Anderson, the insurer's handling of the claim was egregiously self-serving because the insurer knew that UIM coverage would apply if the insured's account of the accident was true, but decided to ignore her account and accept as true a conflicting narrative that would leave her without coverage. Here, there is no allegation that Allstate self-servingly ignored facts. The issue is whether Allstate self-servingly ignored terms in the policy that provided UIM coverage on the known facts. Based on the testimony, a jury could rationally decide that Allstate's initial failure to offer the coverage was not due to a deliberate decision to conceal the availability of benefits, but instead reflected an honest mistake about what the terms of the policy meant in this unusual situation. The fact that Allstate later agreed the UIM coverage was pertinent does not mean that the initial decision was unreasonable, frivolous, or unfounded as a matter of law.
WAC 284-30-330(6), (12), and (16)
Allstate offered to pay Cheryl the UIM policy limit of $100,000 in October 2000, one month after Allstate intervened in the suit against the carjacker. Allstate's letter asked the Greenes to release the claims of both Cheryl and Mitchell as a condition of the proposed settlement of Cheryl's claim. The Greenes contend Allstate was wrongfully attempting to use the settlement of Cheryl's claim as leverage to eliminate Mitchell's claim. An insurance regulation declares such conduct to be unfair and deceptive:
The following are hereby defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance, specifically applicable to the settlement of claims:
. . . .
(6) Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear. In particular, this includes an obligation to effectuate prompt payment of property damage claims to innocent third parties in clear liability situations. If two or more insurers are involved, they should arrange to make such payment, leaving to themselves the burden of apportioning it.
. . . .
(12) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
. . . .
(16) Failure to adopt and implement reasonable standards for the processing and payment of claims once the obligation to pay has been established.
WAC 284-30-330(6), (12), and (16).
The record did not support deciding this claim in favor of the Greenes as a matter of law. Based on the evidence offered at trial, the jury could find that until it was decided on appeal that Mitchell's claim was independently viable, Allstate reasonably believed that Mitchell had only a derivative claim. Allstate offered expert testimony explaining that Allstate's October 2000 letter offering to tender Cheryl's UIM limits was a typical and reasonable way of resolving a derivative claim. Allstate tendered to Cheryl the UIM policy limits for her claim, without the condition, three months later. Because the evidence submitted to the jury did not compel a finding that Allstate was deliberately attempting to force the Greenes to give up one viable claim in exchange for accepting payment on another, the Greenes' motion for a directed verdict based on WAC 284-30-330 was properly denied.
After the verdict, the Greenes made a motion for a new trial, arguing primarily under CR 59(a)(7) that the verdict was not supported by the evidence. In view of our conclusion that the evidence heard by the jury did not demand a directed verdict in favor of the Greenes, we also conclude that the trial court did not err in denying their motion for a new trial.
The Greenes supported their motion for a new trial with a declaration from Mitchell Greene and affidavits of their attorneys. The trial court struck portions of these sworn statements, a decision that the Greenes have challenged on appeal. It is unnecessary to resolve issues relating to the content of the sworn statements because, with or without them, the motion for a new trial was properly denied.
WAC 284-30-330(7)
"Compelling insureds to institute or submit to litigation . . . to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions or proceedings" is an unfair practice. WAC 284-30-330(7). In deciding whether the insurer's conduct is unfair, the pivotal question is whether the insurer had reasonable justification for its low settlement offer. Anderson, 101 Wn. App. at 335.
The Greenes claim Allstate violated WAC 284-30-330(7) by failing to make a complete settlement of all the family's UIM claims in the fall of 2000. As a result, they argue, Cheryl was forced to endure the trauma of the hearing that occurred on November 14, 2000 to assess her damages for purposes of the default judgment; and the family had to file an appeal to recover UIM benefits for Mitchell. They assign error to the trial court's ruling that granted Allstate's motion to dismiss the claim under CR 50.
See Report of Proceedings (June 7, 2006) at 1129-1136; Report of Proceedings (June 8, 2006) at 1205.
Here, it cannot be said that Allstate's failure to settle Cheryl's claim forced her to litigate the damages she established at the default judgment hearing, because Allstate offered the policy limits on Cheryl's UIM claim a month before that hearing. And it cannot be said that the appellate litigation was the result of an unreasonable refusal by Allstate to settle Mitchell's claims. As discussed below, Allstate had at that time a reasonable belief that Mitchell's claim was wholly derivative under the existing caselaw, and that position was adopted by the trial court. The fact that Allstate's position was reversed on appeal, so that Mitchell ultimately recovered the policy limits, does not necessarily mean that Allstate acted in bad faith by refusing to settle his claim at the beginning. The trial court did not err in dismissing the claim brought under WAC 284-30-330(7).
Mitchell's UIM Claims
In 2000 Mitchell sought UIM benefits for his emotional distress. Allstate determined that Mitchell, who did not come upon the scene until after Cheryl and Saul had escaped from the car, did not have an independent claim for UIM coverage and could only claim loss of consortium, an injury derivative of Cheryl's and therefore covered under the "each person" limit applicable to Cheryl. On Allstate's motion for declaratory relief, the trial court agreed. Later, this court reversed the trial court decision. As a result, Allstate paid UIM benefits to Mitchell in April 2004.
One of the allegations in the bad faith lawsuit concerned Allstate's refusal to provide UIM coverage to Mitchell until forced to do so by the appellate ruling. The trial court dismissed this claim on summary judgment. The Greenes contend a jury should be allowed to decide whether Allstate committed bad faith in its handling of Mitchell's UIM claim.
A denial of coverage based on a reasonable interpretation of the insurance policy is not bad faith, even if incorrect, and does not violate the Consumer Protection Act if the insurer's conduct was reasonable. Transcontinental Ins. Co. v. Washington Pub. Utils. Dists. Util. Sys., 111 Wn.2d 452, 470, 760 P.2d 337 (1998). When Allstate sought declaratory relief, no Washington court had squarely held that emotional distress could constitute bodily injury for purposes of UIM coverage. See Daley v. Allstate Ins. Co., 135 Wn.2d 777, 793-94, 958 P.2d 990 (1998) (bodily injury did not include recovery for emotional distress).
While the Greenes' appeal was pending, this court issued its decision in Trinh v. Allstate Ins. Co., 109 Wn. App. 927, 37 P.3d 1259 (2002). In Trinh, the insured watched her best friend die when he was hit by a drunk driver while helping Trinh change a flat tire on the side of the road. The trial court granted Allstate's motion for summary judgment, but this court reversed, holding — as a matter of first impression — that post traumatic stress disorder accompanied by physical manifestations is "bodily injury" within the meaning of UIM coverage.
Allstate's coverage decision, which was based on Daley, was reasonable because Trinh had not yet been decided when Allstate considered Mitchell's UIM claim. Under these circumstances, it was not unreasonable for Allstate to file a declaratory judgment action. Alaska Nat'l Ins. Co. v. Bryan, 125 Wn. App. 24, 35, 104 P.3d 1 (2004) (an insurer is authorized to file a declaratory judgment action to determine coverage). The Greenes allege that because Allstate refused to conduct a proper investigation, it mistakenly believed that Mitchell was never at the scene of the accident; but even if this is true, the Greenes have not shown how knowing that Mitchell was present soon after the ordeal would have led Allstate to come to a different conclusion about coverage. See American Best Food, Inc., v. Alea London, Ltd., 138 Wn. App. 674, 692-93, 158 P.3d 119 (2007) (no showing of insufficient investigation or consumer protection provisions when insured failed to show that further investigation would have lead to a different result).
Insurers must pay claims once it is reasonably clear that they are obligated to do so. WAC 284-30-330(9). The Greenes contend Allstate violated this regulation because it was two years after Trinh and one year after the mandate issued in Greene before Allstate paid Mitchell the UIM limits. Because the Greenes did not raise this issue during the summary judgment proceedings, we decline to review it on appeal. RAP 9.12.
MOTION FOR MISTRIAL
Allstate presented expert testimony at trial by witness Michael Runyan about the reasonableness of Allstate's failure to disclose the UIM coverage applicable to Cheryl and Saul. In the course of his testimony, Runyan inaccurately stated the law. The Greenes moved for a mistrial. The trial court denied the motion but gave a curative instruction. The Greenes assign error to this ruling. We review for abuse of discretion. Anderson v. Dobro, 63 Wn.2d 923, 928, 389 P.2d 885 (1964).
Runyan is an attorney experienced in insurance matters. Allstate offered his testimony to establish the reasonableness of Allstate's initial determination that UIM coverage did not apply to Cheryl and Saul. He served to counter attorney Richard Kilpatrick, who testified in the Greenes' case that it was Allstate's obligation, not the policyholder's, to figure out that the UIM coverage was applicable. Runyan said he thought it was a very unusual case, and that Allstate's handling of it was reasonable if not perfect:
Q: Now, this case involves something that happened, a carjacking, on December 7, 1994. Mr. Kilpatrick has expressed an opinion that Allstate should have opened a UM claim upon notification of that car-jacking. Do you agree with that assessment?
A: I do not.
Q: Why do you not agree?
A: Well, as I say, first of all, this was a unique event. In order for a UIM claim to arise, it has to arise out of the use of an uninsured motor vehicle. In this case, the carjacker was using the Greenes' vehicle, and that is what injured Mrs. Greene and ultimately Saul Greene. As I say, it is an unusual situation. We have to think about it a while and analyze it. It is certainly understandable why somebody looking at this at first blush would not think that it is a UIM claim. Most UIM claims are motor vehicle accidents where one vehicle strikes another, and the vehicle that is at fault either doesn't have insurance at all or has insurance that is not adequate given the injuries. That is the typical UIM case. This is very different and very unusual. The definition of an uninsured vehicle in the policy says that it is not the insured vehicle. So I can see why an adjuster, who is not legally trained, looking at this would not immediately say this is a UIM claim.
. . . .
Q: Have you ever dealt with similar issues like this in your practice, Mr. Runyan?
A: Yes. . . . typically you wait — the UIM attorney waits until the injuries have stabilized and you know exactly what the future holds before you make your demand on the UIM carrier. So it is not unusual for an accident to happen and a UIM claim not be made for months or even years, just depending on what is going on in the UIM individual's case. Q: Why would either a policyholder or their attorney wait to submit a UIM claim or demand? A: As I said, the injuries may not have stabilized. In this case it was a horrible accident. Mrs. Greene was understandably upset, and Allstate was told not to contact her directly. And I think it was reasonable for Allstate to assume that it would take a number of months, even years, for her to get over this event. It is understandable why they wouldn't open a UIM claim under those circumstances.
. . . .
So I think it was reasonable at the time for somebody to look at this and say Mrs. Greene was injured when the carjacker ran over her ankles with her car. Her car is an insured motor vehicle under this policy. Therefore, it is not an underinsured vehicle and therefore UIM does not apply. That is a wrong decision, but it is, I think, a reasonable interpretation, particularly by someone who's not legally trained.
Q: And you say it is a wrong decision. Can you explain what you mean by that?
A. It was determined that the Greenes' injuries did arise out of the use of a underinsured vehicle. So that is the case law in this case. So obviously that is the law.
Report of Proceedings (June 8, 2006) at 1219-27.
After Runyan testified, the court took questions from the jury. The jury asked Runyan why the Greenes' vehicle was ultimately determined to be an underinsured vehicle.
[RUNYAN]: I am not sure I can answer that question right off the top of my head. The use of a vehicle is very broad. And this went up to the court of appeals and it took the court of appeals — I mean, a trial judge got it wrong, to show you how difficult this question is. So it went up to the court of appeals. And the court of appeals ultimately determined that the injuries arose out of the use of an underinsured vehicle. That is what they said, so that is the law.
Report of Proceedings (June 8, 2006) at 1323 (emphasis added).
This answer was wrong. The issue at trial was Allstate's handling of UIM coverage for Cheryl and Saul. The record indicates that in 1994, right after the accident, Allstate decided there was no UIM coverage for Cheryl and Saul. But by October 2000, Allstate had changed its mind on this issue, and eventually paid both of them the limits. Whether she and Saul were legally entitled to UIM coverage was never a litigated issue. The trial court decision that went up on appeal was the July 2001 ruling that Mitchell did not have UIM coverage because he had not suffered "bodily injury" arising out of the "use" of an uninsured vehicle.
The Greenes' attorney, Mr. Barcus, immediately moved to strike Runyan's response and the court granted his motion. Mr. Barcus then attempted, somewhat unsuccessfully, to get Runyan to clarify the issue that went up on appeal:
Q: The matter that went to the court of appeals only involved Mitch Greene's claim; correct?
A: That is true, although one of the issues was whether or not his injuries involved —
Q: The answer is yes, sir?
A: I am going to answer the question.
Q: Is the answer yes, that the only matter that went to the court of appeals involved Mitch Greene's claim?
A: His claim and whether or not —
Q: Thank you, sir.
Report of Proceedings (June 8, 2006) at 1324.
On redirect, Allstate asked Runyan whether it was unreasonable for an adjuster not to consult with legal counsel to ensure that a correct determination is made regarding UIM coverage. Runyan repeated his inaccurate statement:
A: No, because I think under these circumstances they
reasonably concluded that it didn't arise out of the use of an underinsured vehicle. I can see — I mean, I had to go through this a number of times. As I say, the trial judge got it wrong, too.
Report of Proceedings (June 8, 2006) at 1325 (emphasis added).
The Greenes requested a side bar and moved to strike Runyan's response. The court denied that motion to strike. Later that day, the Greenes moved for a mistrial. The court denied the motion but agreed to offer a curative instruction.
That same afternoon, the jury got the case. The trial court included a curative instruction:
Mr. Runyan inaccurately described a former trial court and court of appeals case decision. That decision dealt only with Mitch Greene's claims, which are not a part of this case. You are to disregard all of Mr. Runyan's testimony about such prior decisions. They had nothing to do with Cheryl and Saul Greene's UM claims.
Clerk's Papers at 5505 (Curative Instruction).
On appeal, the Greenes claim that the trial court erred when it denied their motion for a mistrial based on Runyan's testimony. A trial court's denial of a motion for mistrial will be overturned only when there is a substantial likelihood that the error prompting the request for a mistrial affected the jury's verdict. Rodriguez, 146 Wn.2d 260, 269-70, 45 P.3d 541 (2002). A trial court should grant a mistrial only when the defendant has been so prejudiced that nothing short of a new trial can ensure that the defendant will be tried fairly. Rodriguez, 146 Wn.2d at 270.
Runyan's inaccurate comments were prejudicial to the Greenes. Telling the jury that "the trial judge got it wrong" reinforced Allstate's argument that the adjusters made an honest mistake when they decided UIM coverage was unavailable to Cheryl and Saul. How could the applicability of UIM coverage be obvious if a trial judge made the same mistake as the adjusters? However, the trial court immediately struck the erroneous testimony given by Runyan in his response to the jury question, and later gave the curative instruction directing the jury to disregard all of Runyan's remarks about prior court decisions because they dealt only with Mitchell's claim. A curative instruction may obviate the need for a new trial, even if there is misconduct. Aluminum Co. of America v. Aetna Casualty Surety Co., 140 Wn.2d 517, 539, 998 P.2d 856 (2000). The trial court has wide discretion in determining whether an instruction can cure error. State v. Wright, 12 Wn. App. 585, 588, 530 P.2d 704 (1975).
The Greenes argue that the curative instruction given by the trial court was "ill-fashioned" and that the court "buried and minimized" it by reading it to the jury after the other instructions. We disagree. The instruction was powerful. The trial judge effectively communicated to the jury the necessity of disregarding Runyan's erroneous remarks about prior court decisions. Courts presume jurors follow instructions to disregard improper evidence. State v. Russell, 125 Wn.2d 24, 84, 882 P.2d 747 (1994).
The inaccurate testimony by Runyan came in response to a jury question asking why the Greene vehicle was ultimately determined to be an underinsured vehicle. It was a good question. The jury heard testimony that it was an unusual fact pattern for the issue of UIM coverage to come up in connection with a carjacking. An untrained person reading the policy could easily assume that an insured vehicle such as Cheryl's could not be an uninsured vehicle for purposes of UIM coverage.
Apparently, the reason the Greene vehicle was ultimately determined to be uninsured was because when Cheryl was injured, the operator of her car was a driver who had no liability coverage. We deduce this from the fact that while the jury was deliberating, the Greenes attempted to have the jury instructed to that effect. But the Greenes did not present that explanation through testimony. The jury remained uninformed about the thought process through which an attorney or an adjuster would read the policy and come to the conclusion that UIM coverage was available. Ed Sumabat, for example, testified that it "might not have been apparent" in 1995 that the carjacking incident supported a UIM claim. He admitted it was obvious that Cheryl's injuries arose out of the use of a motor vehicle and that the carjacker, who was driving it, did not have liability insurance. But he did not agree that coverage would have been obvious; he said, "I believe there is also something in the policy that states an insured vehicle cannot be an uninsured motor vehicle." Because there was no follow-up to the point he made, the Greenes did not give the jury a sure-fire rationale for deciding that Allstate's initial failure to offer UIM coverage was unreasonable, frivolous, or unfounded. Especially in view of the curative instruction that we presume the jury followed, it is unlikely that the improper testimony about a trial judge who "got it wrong" caused the jury to bring in a verdict for the defense that otherwise would have been for the Greenes. Accordingly, we conclude the trial court did not abuse its discretion by denying the motion for a mistrial.
Clerk's Papers at 3584. The trial court did not give the instruction and the Greenes have not assigned error.
Report of Proceedings at 735.
Report of Proceedings at 736.
CLOSING ARGUMENT
The Greenes contend the trial court violated due process by imposing an unreasonable time limitation on closing argument. The morning of the last day of trial, the court told the parties that they would each have 40 minutes for closing. The Greenes did not object.
That morning, Runyan's testimony and the motion for a mistrial brought about unexpected delays. Further discussion about instructions, and the hearing of the Greenes' motion for a directed verdict, consumed a good part of the afternoon. The trial judge calculated that reading the instructions to the jury would take half an hour and advised the parties that in order to conclude in a timely fashion, each of them would be limited to about 20 minutes for closing. The Greenes objected that it was impossible to do an adequate closing in 20 minutes for a complex insurance case.
THE COURT: Okay, let me ask you this question. What am I going to tell the jury?
MR. BARCUS: You can tell the jury that they will stay here until five o'clock to hear this, as most other judges would do. We have done everything we can. Things were beyond our control. It has taken time. We didn't know that Mr. Runyan was going to do what he did. We are being penalized for nothing that is in our control whatsoever.
THE COURT: Let's continue. I will let you go until the 4:15. You may each have 30 minutes. And that is all you are going to get. It is not my doing that we are here. I have asked you a number of times to hurry up. You told me you could finish by Tuesday. It is now the end of the day Thursday. I will not pay overtime and have my staff miss all of their various evening appointments for this. Let's get the jury out.
Report of Proceedings (June 8, 2006) at 1369.
Counsel for the Greenes stated a due process objection to the 30-minute limitation.
Argument began, and counsel for the Greenes argued for a period of 30 to 35 minutes. At counsel's request, the court notified him when he had 10 minutes left so he could reserve the time for rebuttal, but he continued the argument for the remaining 10 minutes. After defense counsel argued, plaintiffs' counsel stood up to present a rebuttal, but the court advised that time was "used up" and did not permit rebuttal.
The Greenes contend it was error for the court to restrict them to a 30 minute closing argument with no rebuttal "in an extremely complex case."
The trial court has wide discretion in determining the time for argument depending upon the length of the trial, the number of witnesses called, the nature and character of the evidence submitted, and many other factors. State v. Willis, 37 Wn.2d 274, 280-81, 223 P.2d 453 (1950). Unlike Willis, this was not a case where counsel had been led to believe the time for argument would be unlimited. Here, the Greenes were originally advised that argument would be limited to 40 minutes, and they did not object. The Greenes have not shown that reducing the time available from 40 minutes to 30 minutes prejudicially circumscribed their opportunity to sum up the law and the evidence bearing on their straightforward bad faith claim. We find no abuse of discretion in the trial court's determination that 30 minutes was sufficient for a full and fair discussion of the facts of the case.
JURY INSTRUCTION NO. 12
The Greenes assert that it was error to give Jury Instruction No. 12 defining the duty of good faith.
Jury instructions are adequate if they allow each party to argue its theory of the case to the jury, are not misleading, and when read as a whole properly inform the jury of the applicable law. Bell v. State, 147 Wn.2d 166, 176, 52 P.3d 503 (2002). On appeal, jury instructions are reviewed de novo, and an instruction that contains an erroneous statement of the applicable law is reversible error where it prejudices a party. Cox v. Spangler, 141 Wn.2d 431, 442, 5 P.3d 1265 (2000).
The pattern instruction on good faith offers choices depending on the type of case:
An insurer has a duty to act in good faith. This duty requires an insurer to deal fairly with its insured. [The insurer must give equal consideration to its insured's interests and its own interests.] An insurer who does not deal fairly with its insured [, or who does not give equal consideration to its insured's interests,] fails to act in good faith. In proving that an insurer failed to act in good faith, an insured must prove that the insurer's conduct was unreasonable, frivolous, or unfounded. The insured is not required to prove that the insurer acted dishonestly or that the insurer intended to act in bad faith.
6A Washington Practice: Washington Pattern Jury Instructions: Civil, 320.02 (5th ed. 2005) (emphasis added).
Instruction No. 12 excluded the bracketed language. The Greenes took exception to the instruction and proposed an alternative instruction including the bracketed language, so as to instruct the jury that Allstate's duty of good faith included an obligation to give equal consideration to the Greenes' interests as to its own.
The bracketed language is to be used when the duty of good faith is enhanced, as in reservation of rights cases. The Greenes argue that the language is applicable in first-party cases, citing Van Noy v. State Farm Mut. Auto. Ins. Co., 142 Wn.2d 784, 16 P.3d 574 (2001). Van Noy does not apply here because it deals with PIP benefits, whereas the issue for the jury in this case was UIM coverage. Van Noy, 142 Wn.2d at 787. Unlike in reservation of rights cases, the enhanced obligation rule is "unworkable" in the UIM context. Ellwein v. Hartford Acc. and Indem. Co., 142 Wn.2d 766, 780, 15 P.3d 640 (2001), overruled on other grounds in Smith v. Safeco Ins. Co., 150 Wn.2d 478, 78 P.3d 1274 (2003). This is because a UIM insurer "stands in the shoes" of the tortfeasor and has the ability to assert liability defenses against its insured. Requiring the UIM insurer to give equal consideration to the insured's interests contradicts the very nature of UIM coverage. Ellwein, 142 Wn.2d at 781.
6A Washington Practice: Washington Pattern Jury Instructions: Civil, 320.02, notes on use at 287-88 (5th ed. 2005).
The trial court did not err when it refused to instruct the jury that a UIM insurer must give equal consideration to its insured's interests.
DISCOVERY
The Greenes assign error to discovery rulings that in their view deprived them of meaningful discovery of documents in Allstate's claim files.
The parties anticipated a trial in January 2006 with an agreed discovery cutoff on December 5, 2005. In late January 2005, Allstate and the Greenes disclosed their primary witnesses. In February 2005 the Greenes sent some rather broad discovery requests to Allstate. In March 2005 Allstate responded with numerous objections and a few substantive responses. One of Allstate's responses named two adjusters who worked on the Greenes' claims, Ed Sumabat and Linda Gates.
In July 2005 the Greenes sent Allstate a letter requesting a telephonic CR 26(i) discovery conference to discuss Allstate's responses to their discovery requests. The telephonic discovery conference took place on July 28, 2005. Allstate represented that by mid-August 2005 its attorneys would hand over documents they were in the process of reviewing, and move for a protective order if necessary. The Greenes represented that upon receiving these documents they would make arrangements to depose Allstate's adjusters.
Allstate did supply documents in mid-August, including a heavily redacted version of the claim diary, repetitious copies of documents related to the lawsuit, and a detailed privilege log identifying documents which had been withheld as subject to the attorney-client or work product privilege. According to the Greenes' documentation summarizing the more than 2,000 pages of discovery Allstate produced in August, Allstate disclosed that, in addition to the two adjusters named in Allstate's March 2005 discovery responses, at least three other Allstate employees — Teresa Bruno, Tony Wyche, and Cynthia Rue — had some involvement with their claim. Teresa Bruno's involvement was confirmed in October 2005 when Allstate filed its additional witness disclosure list.
Clerk's Papers at 476-486 (attached as Exhibit F to the Greenes' motion to compel).
It was not until November 17, 2005, just three weeks before the agreed discovery cutoff, that the Greenes filed a motion to compel. At that point the Greenes had not yet deposed the Allstate adjusters. In their motion to compel, the Greenes were particularly interested in obtaining the entire claim file and the identities and locations of witnesses. They also wanted to get the claims manual, information about loss reserves, and information about how Allstate had handled similar claims. The Greenes' motion to compel also included a request for extension of the discovery cutoff date.
Allstate responded with a motion for a protective order. On December 7, 2007 the trial court denied the motion to compel and granted Allstate's proposed protective order. In the order denying the Greenes' motion to compel, the court denied the Greenes' "embedded" request for extension of the December 5, 2005 discovery cutoff "without prejudice to any agreement the parties may reach, provided however, that the parties may not agree to conduct any discovery on or after January 6, 2006."
Clerk's Papers at 708 (Order denying motion to compel).
Allstate agreed to depositions of three Allstate employees after the discovery cutoff — Linda Gates, Cynthia Rue, and Ed Sumabat. On December 13, 2005, the Greenes faxed a notice of CR 30(b)(6) deposition of Allstate and subpoenas for deposition of Allstate's former attorney, Irene Hecht, and Allstate employee Teresa Bruno. Allstate filed a successful motion to quash the tardy deposition notices.
The Greenes moved, unsuccessfully, for reconsideration and a trial continuance. The court explained that the motion was being denied due to the Greenes' delay in seeking to compel discovery:
THE COURT:. . . . I previously . . . denied the plaintiffs' motion to compel and granted Allstate's motion for protective order primarily because of the timing.
I indicated that there were lots of . . . violations of local rules, but I did not make my decision based on those violations. . . . I made my decision based on the fact that the plaintiffs did not even attempt to fill in the gaps in this case until mid November 2005, knowing full well that the trial had been continued and continued and continued, and that they had discovery produced to them in August.
I don't think that was timely production of the discovery but August to mid November . . . when you know you have a discovery cutoff December 5th and an agreed discovery cutoff. This has been, as I said, continued and continued and continued. I ask counsel to give me the deadlines you could live with. You set those deadlines. You will live with those deadlines.
Report of Proceedings (January 9, 2006) at 15-16.
In January, the case was transferred to a different judge and at the same time the trial date was continued to May 30, 2006. However, the trial court refused the Greenes' request to reopen discovery. Only the supplementation of previously issued discovery would be allowed.
The Greenes contend that Allstate's evasion of its discovery obligations was atrocious and abusive. They say they were prejudiced because when they did take the depositions of Rue, Gates and Sumabat, they found these adjusters had prepared for their depositions by reviewing files that Allstate had refused to produce. The Greenes seek a new trial with full discovery of claims manuals, the entire claims file, evidence concerning similar claims and loss reserves, the opportunity to depose other witnesses; and imposition of sanctions upon Allstate.
A trial court has wide discretion in ordering pretrial discovery, which will not be disturbed absent a manifest abuse of discretion or a showing that it based its order on untenable grounds. Demelash v. Ross Stores, Inc., 105 Wn. App. 508, 519, 20 P.3d 447 (2001). Improper curtailment of discovery does not require reversal of the judgment unless it was prejudicial. State v. Hamilton, 24 Wn. App. 927, 937, 604 P.2d 1008 (1979).
Allstate contends that the requested discovery was either overly broad, burdensome, or protected by privilege. We need not decide the merits of this argument because even assuming the Greenes' discovery requests were entirely unobjectionable, they waited too long to bring their discovery dispute to the court. The Greenes do not explain why they did not bring a motion to compel months earlier to get the claims manuals, reserve information, and information about similar claims. And while such information is often discoverable, it is not clear that Allstate's failure to provide it prejudiced the Greenes' ability to prove their core claim: that Allstate acted in bad faith when it did not extend UIM coverage at the time of the accident. It is true that the claim diary was heavily redacted. But it is too big a leap to assume that gaining access to the redacted text would have revealed hitherto unheard-of adjusters involved with the case, or that the testimony of such persons would establish that Allstate understood the applicability of UIM coverage right from the beginning.
Under these circumstances, the trial court did not abuse its discretion when it denied the Greenes' eleventh hour motion to compel discovery.
ORDER GRANTING ALLSTATE'S MOTION FOR PARTIAL SUMMARY JUDGMENT
The Greenes assign error to the order granting Allstate's motion for partial summary judgment. The order dismissed the bad faith claims related to handling of the PIP coverage; the bad faith and consumer protection claims relating to the handling of Mitchell's UIM claim; and the claims for breach of contract.
In reviewing summary judgment, this court evaluates the matter de novo, engaging in the same inquiry as the trial court. The appellate court considers the facts and all reasonable inferences from those facts in the light most favorable to the nonmoving party. Summary judgment is proper if no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Anderson v. State Farm Mutual Ins. Co., 101 Wn. App. 323, 329, 2 P.3d 1029 (2000); CR 56(c).
PIP Claims
In May, 2001, the Greenes filed suit on their bad faith claims related to handling of PIP benefits. The issue is whether they were barred by the statute of limitations.
An action for bad faith handling of an insurance claim sounds in tort. Safeco Ins. Co. of Am. v. Butler, 118 Wn.2d 383, 389, 823 P.2d 499 (1992). There is a three-year statute of limitations for tort claims. RCW 4.16.080. Claims based on a violation of the Consumer Protection Act are subject to a four- year statute of limitations. RCW 19.86.120. Actions based on a written contract are subject to a six-year statute of limitations. RCW 4.16.040. A cause of action accrues when a party has a right to apply to the court for relief. Campbell v. Loftus, 36 Wn. App. 678, 679, 676 P.2d 1025 (1984).
May 10, 2001 was more than six years after March 9, 1995, the date when Allstate denied Mitchell's request for PIP benefits. The Greenes argue under CR 13(g) that Mitchell's bad faith action against Allstate should relate back to December 5, 1997, the date when they filed their personal injury complaint against the carjacker. CR 13(g) defines which types of counterclaims are permissive and which are compulsory, but it does not provide a means to escape a statute of limitations. "Relation back," a topic covered by CR 15(c), has to do with amended pleadings and has no application in this case. We conclude the statute of limitations ran on the bad faith claim related to handling of Mitchell's PIP claim.
CR 13(g), provides:
A pleading may state as a cross claim any claim by one party against a coparty arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein or relating to any property that is the subject matter of the original action. Such cross claim may include a claim that the party against whom it is asserted is or may be liable to the cross claimant for all or part of a claim asserted in the action against the cross claimant.
The trial court found that the statute of limitations barred the claim as to Cheryl and Saul as well. Allstate paid PIP benefits to Cheryl and Saul. The Greenes alleged that they suffered ongoing financial and emotional stress due to inordinate delay in making these payments. For example, they claim that it was not until sometime in May 1998 that they received $7,000 that Cheryl was owed as early as September 1996.
The Greenes argue that when an insurer commits bad faith by delaying the payment of available benefits, as contrasted to outright denial of benefits, the statute of limitations should not begin to run until the final payment is made, analogous to the continuing violation doctrine in employment discrimination cases. The continuing violation doctrine allows an employment discrimination plaintiff to allege damage caused by otherwise time-barred discriminatory acts if the discrimination claim is based on the cumulative effect of individual acts. Antonius v. King County, 153 Wn.2d 256, 103 P.3d 729 (2004).
We are not persuaded that the payment of insurance benefits is analogous to an ongoing course of discriminatory acts, or that it would be equitable to toll the statute of limitations until the last payment is made. In the absence of authority or well-developed argument, we decline to extend the continuing violation doctrine to this entirely different context.
The Greenes suggest that the discovery rule applies to delay the accrual of Cheryl's claim. See Green v. APC, 136 Wn.2d 87, 95, 960 P.2d 912 (1998). But Cheryl knew she had a cause of action for bad faith delay of payment at least as early as March 1995, when she began to complain about delays in payment of her medical bills. We see no basis for application of a discovery rule in these circumstances.
Saul's PIP claim consisted of two medical bills. Allstate paid the first in March 1995 and the second in August 1995. Saul's cause of action accrued in March 1995 when the first allegedly late payment was made. The Greenes did not file suit on the handling of Saul's PIP benefits until May 2001, more than six years after the accrual date.
We conclude that all claims of bad faith relating to the handling of PIP benefits for all three of the Greenes were properly dismissed as time-barred.
Breach of Contract Claims
The Greenes argue that the trial court erred when it dismissed their breach of contract claims, which were based on Allstate's handling of their PIP claims, their Consumer Protection claims, and Allstate's alleged bad faith handling of their UIM claims. Dismissal was proper to the extent the Greenes alleged breach of contract regarding the PIP claims because they were time barred. Because Allstate paid the UIM claims in full, the Greenes received the contract remedies to which they would be entitled. The court did not err in dismissing the breach of contract claims.
The judgment is affirmed. The Greenes' request for attorney fees is denied.